By JON MARCHIORLATTI
The South Orange County industrial market continued to tighten during the first quarter.
There are fewer research and development or warehouse and manufacturing buildings for sale or lease.
The vacancy rate for manufacturing space was 3.4% in the quarter, down from 4.1% in the fourth quarter. R & D; vacancy was at 4.6% in the period, versus 6.5% in the fourth quarter.
The only industrial space in abundance is small buildings for sale of 2,500 to 5,000 square feet. Buyer activity still is strong for these small buildings.
Due to the decrease in available industrial space, lease rates and sales prices have increased by 10% to 15% during the past 12 months. This affects all buildings, ranging in size from 20,000 to 200,000 square feet.
There’s additional pressure from the lack of available land for sale. The price of R & D; land is more than $45 per square foot.
Only one major development is set to bring more space to South County. Industrial space at Lennar Corp.’s redevelopment of the former El Toro Marine base isn’t expected to be finished for more than a year.
The key for the next six to 12 months is creativity in the industrial market.
South County’s office market recorded a solid first quarter.
Average asking lease rates rose 7 cents to $2.35 per square foot, versus the fourth quarter. Lease rates were up 10.8% from a year ago.
Office vacancy posted a slight decline in the first quarter, from 4.3% in the fourth quarter to 4.2% in the first. Vacancy was down 57.1% from a year ago.
South County’s retail picture was mixed in the period. Lease rates fell 17 cents to $2.61 per square foot, versus the fourth quarter. Lease rates were down 2.6% from a year earlier.
But vacancy was flat at 3%, versus the fourth quarter. The vacancy rate was down 30.2% from a year ago.
Marchiorlatti is a first vice president in the Newport Beach office of CB Richard Ellis Group Inc.
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